Internet access spending forecast to soar

The South African Internet market is dominated by the mobile segment because of increased investment in cellular coverage by mobile operators who are decreasing tariffs.

As a result, mobile Internet access will form the bulk of the expected growth and growing mobile Internet penetration will help to drive growth in other segments. "Mobile Internet access extends access to entertainment and media beyond the home, allowing consumers to access content wherever and whenever they want," says PwC.

It says mobile Internet growth is mostly driven by the affordability of the services and higher levels of usage on mobile devices than on devices such as laptops.

Internet access via mobile devices comprised 89% of the Internet access market and 81% of its revenues in 2012.

Increased Internet access will remain a significant force behind the major growth in the South African entertainment and media industry, reflecting greater use of broadband devices and smart devices, according to PwC.

Entertainment, media show strong growth

Vicki Myburgh, entertainment and media industries leader for PwC Southern Africa, says the access consumers have to entertainment and media content and experiences is being democratised by the expansion of access to the Internet and the explosive growth in smart devices.

PwC says Internet access will change dramatically in a variety of ways over the next five years and survival will depend on scale, which will require operators to collaborate more.

"Working with the government, regulators and content providers will also be vital. Those that succeed stand to gain a slice of a very large business," the PwC report states.

In SA, slow regulation processes have negatively affected SA's broadband deployment. However, the government is addressing some of the policy and regulatory issues as it has an ambitious plan to provide broadband access to every citizen by 2020.

"There is a strong belief that Internet access matters. Both the government and consumers are increasingly seeing broadband as a vital utility that enhances lives, society and the economy as a whole," the report says.

Government policies needed

A report from the secretariat of the Broadband Commission, done in collaboration with Ericsson, shows that while national broadband plans increasingly recognise broadband's role in socioeconomic development, much more needs to be done to support this "invisible technology".

"A regulatory environment that encourages widely accessible and affordable broadband deployment is the only way to realise its potential to advance sustainable development - for example, through proactive policies on spectrum and the protection of inventions," the report states.

It recommends that the governments create a streamlined and enabling regulatory environment for the broadband era that hastens the removal of barriers to market entry for broadband uptake. Broadband Internet is seen as a driver of innovation. It supports the delivery of healthcare and financial inclusion, through mobile banking and mobile money in many countries.

According to the PwC report, the growth of Internet access has also seen spending on advertising increase. PwC predicts that total spend on Internet advertising will reach R3.7bn by 2017 from R1.2bn. "SA's Internet advertising market is growing at nearly twice the global rate," the report says.

Mobile advertising, which includes all spending on mobile phones and tablets, excluding text message advertising, will see its share of Internet advertising increase from 16% last year to 26% in 2017.

Internet advertising growth will be pushed along by the growing broadband penetration, declining broadband prices and the availability of devices.

According to PwC, South Africans and Africans in general are more predisposed to receive advertising on their phones than their global peers.

Social media platforms have also contributed to this rise in advertising revenue as those platforms have been able to monetise their content.

Source: Business Day via I-Net Bridge